How I Picked My Bank (Badly)
The allure of online banks has been pulling on me for a while now. Part of this is because of the benefits that online banks can offer, but another part is because I’m unhappy with my current bank—which I chose for all the wrong reasons.
Two years ago, my husband and I wanted to get a joint account and close our other accounts; in the aftermath of a wedding and a down payment on our house, we felt pretty financially unstable. It wasn’t that we couldn’t pay our bills, but the savings we’d had for a while were now gone, manifest in a beautiful party and the roof over our heads. A single, joint account sounded like a great way to work together on re-building our financial stability.
But we rushed the process of choosing a bank. First we went to the local credit union—because it was walking distance from our house—and tried to get an account. It became clear that it would be a week or two before we could even get an appointment to find out if we could get an account, and we got impatient. There was a national bank just a few steps away. Why not give them a try?
We sat down with the relationship banker on duty and told her what we wanted: a simple savings and checking account, with some free checks and debit cards. When we walked out, she’d convinced us to get a combined account with a high minimum balance to avoid a monthly fee, a credit card we didn’t want or need but that we were pretty sure got her a commission, and the debit cards we’d actually wanted.
We maintained the balance, we used the debit cards, and we earned 30 cents of interest on our savings for almost two years before we considered the fact that maybe we should switch to a different bank. After our initial rush to get joint accounts, we realized that we were missing out on benefits that could help our money grow. We also worried that if we failed to hit the minimum balance on our bank account, we’d start getting charged 11 dollars a month for the privilege of banking with this national institution.
We also were pretty annoyed with the local branch—they kept trying to sell us on additional products—and at this point we only visited to get cash. Would the benefits of online banks outweighed the negatives of having no local branch? It was time to find out.
Finding favorable interest rates
I knew that online banks offered higher interest rates than many of the local banks in my area, and I found one bank that would add $10 in interest per month to our emergency fund. An extra $10 seemed anticlimactic—despite being so much more than the 35 cents we were currently getting—but it made me realize that, yes, that kind of interest would add up. If we grew our liquid savings, it would add up even faster. I can get a burrito and a drink for $10; why not give my savings account a monthly burrito too?
Without a local bank branch, how would we get cash? Would we have to pay ATM fees? Would we be the kind of people who requested an extra $20 every time we went grocery shopping?
The online bank we were considering only had free access to an ATM network that wasn’t conveniently placed in our town, which made us a little nervous—but then we found out they refund up to $10 in ATM fees every month, no matter what ATM we use. Using a combination of getting cash back at stores when we can and getting our fees reimbursed when we can’t, we figured we could make this work. Very few of our cash withdrawals were essential, though we half-heartedly try to buy discretionary purchases with cash to help us think twice about it.
I get some of my freelance income via paper check, so I needed a way to deposit them. Our local bank’s phone app allows mobile deposit, but when I tried to use it, there was a fee per check, which made me averse to mobile deposit options.
I did learn that the online bank has fee-free mobile deposit, which I think is becoming more and more of a standard. Being able to take a picture of a check anywhere and get the money deposited feels like magic, but it also is another nail in the coffin for my local bank when I realize that even their mobile features are more expensive than the ones offered by the online bank. The more fees our local bank foisted on us, the quicker we resolved to move online.
Extricating ourselves from our bank
I’ve had all this research squared away for a few months now, but I still haven’t extricated myself from the local bank and made a clean break toward online banking.
For starters, our current bank account has that minimum balance requirement; to avoid being hit with $11 in maintenance fees while I’m transitioning my accounts, I either have to keep that high minimum balance and put a small amount of money in the online bank, or I have to try to get everything done and signed and delivered within a month, including things like shipping debit cards and closing accounts.
The process involves cancelling and resetting our automatic bill payments, waiting for new checks and debit cards to arrive, and making sure we don’t actually close the account at a time when we might need the rest of our savings, which will be issued as a cashier’s check and then mailed to us.
There’s also the recent Equifax leak, which has thrown a snag into our plans. My husband was potentially impacted by the Equifax leak, so he went in and froze his credit reports pretty much at the same time that I was applying for our online bank account. For some reason, I thought that a non-credit account like a combo savings/checking account wasn’t a credit-checkable situation, but the next day, I got a call saying that they needed to check my husband’s credit (a soft inquiry) to be able to move forward. Now we have to unfreeze, check, and refreeze his account.
What I’m realizing is that much of this work is time-consuming and uncertain—but only because we have to switch banks and habits, not because I like anything about my local bank better. But I know that the sooner we get all of this done, the sooner we’ll get that burrito a month in interest.
Laura Marie is a writer and teacher in Ohio. Read more of her work at Messy Mapmaker.